Contents
Motley Fool Podcast Overview
In this podcast episode, Motley Fool host Dylan Lewis, along with analysts Emily Flippen and Bill Mann, dive into several pressing topics:
– The impact of Hurricane Helene in the Southeast U.S. and its implications for insurance and reinsurance industries, with a focus on how black swan events complicate these sectors.
– Updates from Meta on its new Orion augmented reality prototype and the ongoing drama at OpenAI.
– Expectations from Vail Resorts regarding a decline in skier visits, Costco’s boost from gold sales, and Accenture’s gains from the generative AI trend.
– Insights on two stocks worth monitoring: Carnival Cruise Lines and Visa.
Innovation at Braze
Braze CEO Bill Magnuson took time from the company’s Forge 2024 event to discuss with Motley Fool analyst Tim Beyers the company’s latest innovations. Magnuson elaborates on how Braze is assisting marketers to leverage AI and the strategic integration of these new tools into the company’s growth narrative.
To explore more episodes of The Motley Fool’s free podcasts, visit our podcast center. For those new to investing, check out our beginner’s guide to investing in stocks. A full transcript follows the video.
This video was recorded on Sept. 27, 2024.
Introduction
Dylan Lewis: Welcome to a new episode of Motley Fool Money. I’m Dylan Lewis, and today I’m joined by Motley Fool senior analysts Bill Mann and Emily Flippen. Great to have you both on the show.
Bill Mann: Dylan, how’s it going?
Emily Flippen: Hi, glad to be here.
Dylan Lewis: I’m doing well and eager to delve into today’s topics. We’ve got a lot on our plate, including a preview of the upcoming ski season, a company using AI to enhance business-customer interactions, and, of course, the stocks you have on your radar. As we record this episode, Hurricane Helene has impacted Florida and the Southeast U.S., leaving over 4 million without power across several states. Bill, as a North Carolinian, I’m sure this hits home for you.
Bill Mann: Indeed, Dylan. This storm is quite unusual due to its size, affecting areas not typically hit by hurricanes, such as parts of North Carolina and inland cities like Atlanta. It’s reminiscent of Hurricane Hugo, which caused significant inland damage. Our thoughts are with everyone affected, and we hope for a swift recovery.
Dylan Lewis: Indeed. Our hearts go out to those in the region, especially between Panama City and Cedar Key, Florida, which has been hit by five hurricanes in eight years. As a business and investing show, we often discuss the financial ramifications of these events. Bill, this hurricane underscores the complexities and challenges the insurance sector faces in states like Florida.
Bill Mann: Absolutely. Florida’s insurance market has become notoriously imbalanced, with this being the first Category 4 storm to hit its panhandle since 1851. The increasing value of at-risk land due to population influx has exacerbated the situation, making storms like Helene potentially more costly than past hurricanes like Andrew or Katrina.
Dylan Lewis: Emily, we’ve seen insurers pulling out of states or refusing to renew policies due to these complexities. What’s your take on the insurance landscape?
Emily Flippen: It’s all about underwriting and accurate risk assessment. Extreme weather events are no longer rare, and outdated statistical models may underprice these risks. For example, Lemonade struggled with the Texas deep freeze in 2021, highlighting how what were once “Black Swan” events are becoming more frequent. As a result, both insurers and reinsurers are increasing premiums, driving up insurance costs across the board.
Dylan Lewis: That makes sense, given the rising property values and associated risks. Bill, any closing thoughts on the insurance industry?
Bill Mann: While it’s tempting to attribute these challenges solely to extreme weather, it’s more nuanced. The concentration of risk on Florida’s coast and market anomalies like roofing scams also play a role. It’s a complex market, and we hope those needing help receive it swiftly.
Meta’s Latest Developments
Dylan Lewis: Shifting gears, Meta recently showcased its new hardware at the Connect conference. CEO Mark Zuckerberg introduced the Orion augmented reality glasses. Emily, Verge writer Alex Heath made a witty observation, “Orion isn’t a mirage, but it’s also not quite a product.”
Emily Flippen: Initially, I thought it was a joke. The glasses seemed like an early April Fool’s prank. Although it’s a real product with potential, it’s far from market-ready. Meta hints it could be priced like an inexpensive smartphone, but functionality is currently limited. Despite its bulky appearance, the technology, such as EMG tech allowing hand movement control, is intriguing. While it’s distant from being street-ready, technological advancements are promising.
Bill Mann: It’s surprising, especially given Meta’s partnership with Luxottica, the world’s largest eyewear designer. The design resembles a Ray-Ban but with a tech-forward angle. Focusing more on augmented reality than virtual reality, which has been Meta’s traditional metaverse approach, may ease adoption. It’s a pragmatic step towards broader VR acceptance.
Dylan Lewis: Not expecting a surge of Kurt Rambis look-alikes, but like hybrid vehicles, augmented reality could be a crucial intermediate step for Meta.
OpenAI’s Strategic Shift
Dylan Lewis: Wrapping up this segment, OpenAI transitions from a nonprofit to a for-profit public benefit corporation. This week, CTO Mira Murati stepped down, joining other key exits. Bill, do you think this story is ripe for an Aaron Sorkin retelling?
Bill Mann: It feels dramatic, like an episode of “Succession.” Announcing a $150 billion valuation amidst Meta’s free, open-source model announcement is bold.
Dylan Lewis: This valuation speaks to OpenAI’s corporate evolution. They’re bringing in CFOs, chief product officers, and making investor-friendly changes. Emily, do you think this cultural shift from research-focused to profit-oriented could challenge them?
Emily Flippen: I don’t think they had a choice. Generating revenue is critical to sustaining operations and innovation. While some employees might struggle with this shift, it’s necessary for growth and competitive advantage in the generative AI landscape.
Earnings Insights and Market Trends
Dylan Lewis: After the break, we’ll explore how a unique product is boosting Costco’s e-commerce. Stay with us on Motley Fool Money.
Welcome back to Motley Fool Money. I’m Dylan Lewis, alongside analysts Bill Mann and Emily Flippen. We’re looking at a light but impactful earnings week, highlighting AI spending and your winter vacation plans. Emily, let’s start with Vail Resorts. What can skiers expect this season?
Emily Flippen: Skiers can anticipate fewer crowds compared to recent years. Vail Resorts reported a nearly 10% drop in skier visits due to post-COVID normalization and extreme weather. Australia’s snowfall declined by 44%, reducing visits by 18%. Such weather changes impact Vail’s operations significantly, contributing to lower pass sales. Although loyal customers remain, attracting new ones is challenging due to rising costs and weather uncertainties.
Dylan Lewis: Bill, Costco’s quarterly results revealed an intriguing detail. The gold rush is real. CFO Gary Millerchip noted that gold bars significantly boosted e-commerce sales. What do you make of this?
Bill Mann: It’s fascinating, especially since it’s an online phenomenon. Costco’s innovative offerings, like gold and even coffins, resonate with consumers, driving strong quarterly results. Trading at about 50 times trailing PE, Costco needs consistent performance to justify its valuation, and selling gold seems to be a successful strategy.
Dylan Lewis: Amid a challenging consumer environment, Costco maintains customer relationships and its membership model, which is crucial for its success.
Bill Mann: Indeed, unlike Vail Resorts, Costco isn’t heavily reliant on consumer debt. It provides remarkable value, securing its position as a consumer favorite even when upstream and downstream businesses face difficulties.
Dylan Lewis: Lastly, Accenture’s earnings highlight its gains from generative AI, clocking in at $900 million, a significant increase. Emily, should investors be excited?
Emily Flippen: Accenture wants investors to focus on its AI-driven demand. While AI projects are flourishing, core consulting growth remains low. Despite macroeconomic challenges, Accenture’s demand stems from large transformative deals centered on AI expansion. Its managed services segment’s book-to-bill ratio of 1.4 underlines this demand. While their core business slows, their strategic pivot to AI is promising.
Dylan Lewis: CEO Julie Sweet noted companies reallocating IT budgets to fund AI initiatives. Bill, this reflects both a shift in spending priorities and a push toward innovation.
Bill Mann: Julie Sweet’s comments highlight spending adjustments at major clients, emphasizing AI’s role in growth despite broader budget constraints.
Braze’s Innovations and Market Strategy
Dylan Lewis: After a break, join us as Braze CEO Bill Magnuson discusses how companies engage customers and leverage AI. Stay tuned to Motley Fool Money.
Welcome back to Motley Fool Money. I’m Dylan Lewis. Braze hosted its Forge 2024 event, showcasing how it’s revolutionizing customer experiences. CEO Bill Magnuson shared insights with analyst Tim Beyers about Braze’s innovations, how it’s enabling marketers to harness AI, and its role in the company’s growth.
Tim Beyers: Braze is a leading customer engagement platform, helping brands forge stronger relationships by orchestrating digital communication through various channels like email, push notifications, and SMS. By understanding customer journeys, Braze enhances brand-consumer interactions, driving revenue and retention.
Project Catalyst and AI Integration
Project Catalyst was a major highlight, using AI to automate decision-making and enhance the customer journey. This visual environment allows marketers to experiment and personalize, optimizing engagement strategies with advanced data science and machine learning.
Tim Beyers: From an investor perspective, Braze’s growth relies on making it easier for clients to engage customers effectively. Is this changing customer interactions?
Bill Magnuson: Absolutely. Clients seek better business outcomes, and Braze facilitates this through enhanced experimentation and personalization. By offering more data flexibility and collaboration between marketing and engineering, Braze drives customer success and growth.
Stocks on the Radar
Dylan Lewis: As always, people on the program may have interest in the stocks they discuss, and The Motley Fool may have formal recommendations for or against, so don’t buy or sell anything based solely on what you hear. I’m Dylan Lewis, joined again by Emily Flippen and Bill Mann. Let’s dive into the stocks on our radar. Bill, what are you watching?
Bill Mann: I’m looking at Carnival Cruise Lines. Remember when Cruises were severely disrupted by COVID? They’re back with record earnings. The upcoming challenge is sustaining this momentum. Carnival has optimized its fleet and marketing. We’ll see on Monday if this trend continues.
Dylan Lewis: Rick, a question about Carnival Cruise Lines.
Rick Engdahl: With no recent disease outbreaks, what’s next for Carnival? Fish flu, whale flu, maybe?
Bill Mann: Perhaps the next “flu” is overtourism. Popular destinations are capping tourist numbers, which could impact cruise lines significantly.
Dylan Lewis: Emily, what’s on your radar this week?
Emily Flippen: Visa is on my radar for a less-than-ideal reason. The Department of Justice is suing Visa, alleging anti-competitive practices. With a 60% market share in U.S. debit cards, Visa faces potential fines, penalties, and structural changes.
Dylan Lewis: Rick, a question about Visa or the regulatory environment?
Rick Engdahl: How much of Visa’s revenue comes from Carnival Cruise Lines’ ticket purchases?
Emily Flippen: While not a significant portion, Visa’s fee-driven revenue model is substantial, with about half from the U.S. This regulatory scrutiny could have notable implications.
Dylan Lewis: Rick, two distinct choices. Which one catches your eye?
Rick Engdahl: I’ll go with Carnival Cruises. It’s currently the hot ticket.
Dylan Lewis: Rick’s all about the experience rather than the infrastructure. Bill, Emily, thanks for sharing your insights and radar stocks. Rick, appreciate your input. That concludes this week’s Motley Fool Money radio show. The show is mixed by Rick Engdahl. I’m Dylan Lewis. Thanks for tuning in. We’ll catch you next time.
